Oil prices increased on Tuesday…
As U.S. shale companies increase…
A consortium of international oil majors led by Chevron has approved a $36.8-billion output expansion plan for the giant Tengiz oilfield in Kazakhstan, the country’s Energy Ministry announced on Tuesday. The consortium also includes Exxon Mobil and Russia’s Lukoil.
Plans are to bolster production to 39 million tons of crude per year, or 850,000 barrels per day, by 2022. At present, the field yields 27 million tons per year, which represents over a third of Kazakhstan’s overall crude oil output. At peak capacity, Tengiz – one of the biggest oil fields in the world – is expected to have an output close to what Great Britain produces at present.
Kazakh Energy Minister Kanat Bozumbayev stated: “Today we are witnessing a historic event not just for the oil and gas sector but for the whole country." According to the minister, the expansion will generate some $120 billion in extra taxes by the year 2033 when the oilfield development contract ends, as well as a cumulative 250 million tons of crude.
Kazakhstan has a 20 percent stake in the project through state oil company KazMunayGaz. Chevron, the operator of the project, has 50 percent, Exxon Mobil has 25 percent, and Lukoil has 5 percent. Chevron, Exxon Mobil and Lukoil will spend $27.1 billion on facilities and $3.5 billion on wells. The group has marked $6.2 billion for contingency and escalation.
Related: Big Oil Could Spark A Renaissance In U.S. Shale
Tengizchevroil, the joint venture that operates the field, will invest its own and borrowed funds in the expansion, said General Director Ted Etchison. The project was put on hold last year as estimates for the costs increased while the price of oil continued to drop. While Chevron tightened its belt elsewhere, the Tengiz project did not see any cuts.
The Tengiz was discovered in 1979, but at the time Soviet engineers could not find a way to develop it. Chevron won the development rights in 1993.
By Lincoln Brown for Oilprice.com
More Top Reads From Oilprice.com:
Lincoln Brown is the former News and Program Director for KVEL radio in Vernal, Utah. He hosted “The Lincoln Brown Show” and was penned a…